“Although in the past we have not traditionally announced Letters of Intent, we would like to share this very important development with the market, which has been in the works for some time. I am very pleased to announce that we have entered into a letter of intent and have begun due diligence for the $30 million credit facilities offered with connectFirst. Our business is on a solid footing, having generated positive cash flow from operations in the last quarter before changes in working capital. Our retail stores continue to outperform the market, increasing market share every month since we launched our innovative discount club model in October 2021, and our execution has not gone unnoticed by leading lenders,” said Raj Grover, President and CEO of High Tide. – boost our balance sheet without diluting our existing shareholders. The first one $15 million dollars of term debt will help clean up our short-term debt and provide funds for working capital and capital expenditures, and the $15 million renewable M&A Master Line will provide dry powder for acquisitions. We are in discussion with many groups, in different countries, and focused on different parts of the ecosystem that would complement High Tide. These acquisition targets demonstrated a desire to take a position in our Company through equity transactions. However, we anticipate that having an acquisition line should help us close more accretive transactions more quickly, while reducing dilution for our existing shareholders,” added Mr. Grover.
OFFERED CREDIT FACILITIES
- 15 million Canadian dollars Term debt: The Term Debt will be accessible on request by High Tide. The term debt will only be for 12 months of interest, followed by mixed principal and interest payments.
- Master Line M&A for future growth: The proposed credit facilities include the $15 CAD Renewable M&A Master Line to support future M&A initiatives. The Master Line M&A will have a term of 5 years on each drawdown, with blended principal and interest payments commencing with each drawdown.
- Low interest rate: High Tide continues to benefit from the best interest rates in the industry which reflect the strength of its business. The interest rate under the proposed credit facilities is a fixed rate of 5.19% per annum for the term debt and connectFirst prime + 2.50% per annum for the M&A master line.
- Financial commitments: The proposed credit facilities will have a quarterly tested financial covenant, a debt to equity ratio of less than 2:1. In addition, proposed credit facilities will have an annually tested covenant, a debt service coverage ratio of at least 1.25:1, a monthly current ratio covenant of at least 1.25:1 and a covenant tested annually, a funded debt to EBITDA ratio of no more than 4:1 from the year ending October 31, 2022. High Tide’s 12-month forecast predicts it will be comfortably in compliance with all financial covenants.
The Company expects to complete the proposed credit facilities during the first half of June 2022, subject to certain conditions precedent to disbursement and the satisfaction of other customary conditions precedent. While the parties are in due diligence, no assurance can be given as to the closing of the proposed credit facilities.
connectFirst Credit Union, one of the largest and most successful credit unions in Canadais a full-service financial institution with over $6 billion in assets under administration. connectFirst employs 750 Albertans who provide a range of financial products and advice in more than 40 central and southern communities alberta. It serves over 125,000 members through a community-driven banking approach.
ABOUT HIGH TIDE
High Tide is a leading retail-focused cannabis company with global physical and e-commerce assets. The company is Canada’s largest non-franchise recreational cannabis retailer by revenue, with 113 current locations spanning Ontario, alberta, Manitobaand Saskatchewan. High Tide featured in Report on Business magazine’s third annual ranking from Canada Top Growing Companies in 2021 and was named among the 10 Best Performing Stocks in Diversified Industries in the 2022 TSX Venture 50™. The Company is also North America first and only cannabis discount club retailer, with Canna Cabana, Meta Cannabis Co. and Meta Cannabis Supply Co. banners, with additional locations under development across the country. High Tide’s portfolio also includes retail kiosk and smart locker technology – Fastendr™. High Tide has been serving consumers for over a decade through its established e-commerce platforms including Grasscity.com, Smokecartel.com, Dailyhighclub.com and Dankstop.com and most recently in the hemp-derived CBD space through Nuleafnaturals.com, FABCBD.com, BlessedCBD.co.uk and BlessedCBD.de, as well as its wholesale distribution division under Valiant Distribution, including licensed entertainment manufacturer Famous Brandz. High Tide’s strategy as a parent company is to expand and strengthen its integrated value chain, while providing a complete customer experience and maximizing shareholder value.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
For more information on High Tide Inc., please visit www.hightideinc.com, its profile page on SEDAR at www.sedar.com and its profile page on EDGAR at www.sec.gov.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this press release constitutes forward-looking statements under applicable securities laws. All statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by words such as “may”, “should”, “anticipate”, “expect”, “potential”, “believe”, “intend” or the negative form of these similar terms and expressions. Forward-looking statements in this press release include statements relating to: High Tide obtaining the offered credit facilities on the terms and within the time periods set forth in this press release; the use of proceeds of the proposed credit facilities as set forth herein; the anticipated effects of the proposed credit facilities on High Tide’s business and operations; the Company using the proposed credit facilities to make future acquisitions; and High Tide’s plans to expand and strengthen its integrated value chain, while delivering a comprehensive customer experience and maximizing shareholder value.
The forward-looking information contained in this press release is based on certain assumptions and expected future events, namely: High Tide will obtain the proposed credit facilities (and have the ability to obtain all required approvals) on the terms and within the provided by High Tide Tide; the use of the proceeds of the proposed credit facilities will be used as set forth herein; the Company will use the proposed credit facilities to repay its debt, replace its current credit facility and make future acquisitions; High Tide’s financial condition and development plans do not change as a result of unforeseen events; there will always be demand and market opportunity for High Tide’s product offerings; current and future economic conditions will not affect High Tide’s business and operations or High Tide’s ability to capitalize on anticipated business opportunities; and High Tide will expand and strengthen its integrated value chain, provide a comprehensive customer experience and maximize shareholder value. Although considered reasonable by High Tide’s management at the time of preparation, such statements may prove to be inaccurate and cause actual results to differ materially from those anticipated, and as such, undue reliance should not be placed on forward-looking statements.
These statements involve known and unknown risks, uncertainties and other factors, which may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements, including, but not to limit: the risks associated with the cannabis and cannabidiol industries in general; High Tide is unable to obtain the credit facilities offered and/or is unable to use the facilities on the terms and within the time limits; the inability of High Tide to obtain required approvals; High Tide’s inability to pursue further acquisitions in the future; and High Tide’s inability to expand and strengthen its integrated value chain, while delivering a complete customer experience and maximizing shareholder value.
The forward-looking statements, forward-looking financial information and other measures presented herein are not intended to be indications or projections for the periods referenced herein or for any future period, and in particular, past performance is not a indicator of future results and the results of High Tide in this press release may not be indicative and does not constitute an estimate, forecast or projection of the future results of High Tide. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and are therefore subject to change thereafter. High Tide disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Factors that could cause the anticipated opportunities and actual results to differ materially include, but are not limited to, the matters noted above and elsewhere in High Tide’s public filings and material change reports, which are and will be available on SEDAR.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities of The United States of America. The Securities have not been and will not be registered under the United States Securities Act of 1933 (the “1933 Act”) or any state securities law and may not be offered or sold in United States or to US Persons (as defined in the 1933 Act) unless they are registered under the 1933 Act and applicable state securities laws, or an exemption from such registration be available.
SOURCE High Tide Inc.